Investors flock to emerging markets to benefit from post-coronavirus recovery

Asia and Latin America among popular choices

David Brenchley
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In Peru, a single-A rated, medium-dated government bond yields 4% and the cost of hedging that is close to zero
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In Peru, a single-A rated, medium-dated government bond yields 4% and the cost of hedging that is close to zero

Emerging markets could be set to outperform their developed counterparts as positive movements on a Covid-19 vaccine and "horrific headwinds" for western economies give investors renewed optimism on the asset class.

In the ten years to 31 December 2019, the MSCI Emerging Markets index returned 74.9%, well below that of the MSCI World index, which gained 201.2% during that period. However, in 2020 that performance gap has closed, with the MSCI World up 11.9% and MSCI EM 11.7% higher at the time of writing (3 December). Ex-Stewart Investors and Fidelity EM pros launch first Aikya fund Investors are becoming increasingly bullish over the prospects for EM moving into 2021. The most recent Bank of America global fund manager survey showed an"unambiguous rotation to EM", with about half of responden...

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